Key financial, tax, and estate decisions follow the loss of a spouse in retirement. Find practical next steps and timing considerations in our comprehensive guide.

Navigating Retirement After the Loss of a Spouse: Key Financial, Tax, and Estate Planning Steps

Losing a spouse brings both emotional and practical challenges. In the midst of grief, financial matters still require attention, and some carry deadlines that can affect taxes, eligibility for Medicare benefits, and the transfer or ownership of assets in the future. Knowing which steps to take soon and which can wait may help reduce stress and prevent rushed decisions.

While every situation is different, guidance from a CPA, estate planning attorney, and financial advisor can help you make choices that align with your circumstances and long-term plans.

This guide highlights suggested steps for surviving spouses to consider, including:

• Time-sensitive actions in the first weeks, such as Social Security notifications, Medicare adjustments, and account updates
• Choices about retirement accounts and survivor benefits that can shape income and tax exposure for years to come
• Tax and estate planning decisions that may help preserve exemptions, manage required distributions, and guide how assets are owned and transferred

Please note that this guide does not constitute legal or tax advice. We recommend consulting qualified professionals before making financial, tax, or estate decisions.

First 8 Weeks: Actions That Shouldn’t Wait

Confirm Social Security notifications and review survivor benefits

In most cases, the funeral home reports a death to the Social Security Administration (SSA), but it’s important to confirm this yourself. Contact the SSA directly to check the status and ask about any benefits you may be eligible for as a surviving spouse. This could include monthly survivor benefits and, in some cases, a one-time lump sum payment. These benefits are not automatic if you have not began Social Security benefits—you must apply, typically by phone or in person. We can assist you with evaluating your Social Security benefits and the timing of each benefit.

Request a Medicare IRMAA reduction if your income will drop

If your Medicare premiums include an Income-Related Monthly Adjustment Amount (IRMAA), the death of a spouse is considered a “life-changing event” that allows you to request a reassessment. If your household income is now lower, this reassessment may reduce what you pay for Medicare Part B and Part D coverage. The request is made through the SSA and usually requires supporting documentation.

Create an inventory of accounts and obtain multiple death certificates

Order several certified copies of your spouse’s death certificate, as many financial institutions, government agencies, and insurance companies will require an original before they process changes. As you contact banks, investment firms, and other account custodians, take the opportunity to create a list of all accounts and verify who is listed as the beneficiary on each. Avoid moving or consolidating assets until you understand the implications for taxes, inheritance, and account rules.

How a financial advisor can help
A financial advisor can work alongside your tax professional and attorney to:

• Prioritize the most time-sensitive actions in the first weeks
• Identify which benefits to claim and when
• Estimate how income changes could affect Medicare costs
• Determine the best order for addressing accounts and assets

A coordinated approach can help reduce the risk of missing deadlines or making moves that have unintended tax consequences.

Retirement Accounts and Income Decisions with Tax Impact

Inherited IRA and 401(k) options for spouses

When a surviving spouse inherits a retirement account, they generally have more choices than any other type of beneficiary. These options can include:

• Rolling the account into your own IRA — often a good fit if you are over age 59½, as it allows you to follow your own required minimum distribution (RMD) schedule. This may be beneficial if you are younger than your spouse, as they will be subject to RMDs sooner than you will be.
• Keeping the account as an inherited IRA — which can sometimes delay RMDs if your spouse passed away before they were required to start withdrawals, or allow you to use a life-expectancy-based withdrawal schedule. If you are under 59 1/2, you may be eligible to take distributions from the inherited IRA without the 10% penalty.
• Following the employer plan’s rules — some workplace retirement plans require faster withdrawals unless you move the funds to an IRA first.

Your age, your spouse’s age, and the specific rules of the account can all influence which option may make the most sense from a tax and income perspective.

Coordinate Social Security claiming strategies

Survivor benefits are separate from your own retirement benefit, which means you may be able to claim one first and switch to the other later. For example, you might claim a survivor benefit now and delay your own retirement benefit to allow it to grow, or the reverse.

The best approach depends on your age, the size of each benefit, and your income needs. Making the right choice can have a long-term impact on lifetime benefits received.

How a financial advisor can help
A financial advisor can work with you and your tax professional to:

• Compare the tax and income effects of rolling over versus keeping an inherited retirement account
• Review your spouse’s plan documents to identify any restrictive withdrawal rules
• Model different Social Security claiming strategies and their effect on long-term income
• Coordinate RMD timing with other sources of retirement income to help manage your tax bracket

 Inherited IRA vs. Spousal Rollover: Key Differences for Surviving Spouses 

Tax Changes in the Years After the Loss of a Spouse

Filing status changes

In the year your spouse passes away, you may still be able to file a joint tax return if you have not remarried. For the two tax years that follow, some individuals qualify for Qualifying Surviving Spouse status (formerly known as Qualifying Widow or Widower), which preserves joint filer tax brackets during that time if you have qualifying dependents.

After this period, you will typically move to single filer status, which often means higher taxes on the same income due to narrower brackets and a smaller standard deduction.

Narrower brackets and Medicare surcharges

A drop in income after losing a spouse does not always lead to a lower tax bill. Narrower tax brackets and reduced deductions may result in a higher percentage of your income being taxed. In addition, Medicare surcharges (IRMAA) can still apply based on your income from two years prior. Strategic withdrawals, Roth conversions, or timing capital gains during the transition period can help manage potential increases in both taxes and Medicare costs.

How a financial advisor can help
A tax planning advisor at EP Wealth can work with you and your tax professional to:

• Evaluate how filing status changes will affect future tax years
• Plan retirement account withdrawals to manage bracket changes and avoid unplanned Medicare surcharges

• Identify years where Roth conversions or charitable strategies could be more tax-efficient
• Coordinate timing of income, deductions, and investment sales to help reduce long-term tax exposure

Estate, Property, and Portability Considerations

Step-up in basis for taxable assets

When you inherit certain assets—such as real estate, investments, or business interests—their tax basis is generally adjusted to their fair market value as of the date of death. This “step-up in basis” can reduce capital gains taxes if the asset is later sold. In community property states, all community property owned by the couple may receive a full step-up in basis at the first spouse’s death. Documenting date-of-death values with appraisals or statements is important for accurate tax reporting later.

Electing estate tax portability

Even if the estate does not currently owe federal estate tax, filing Form 706 can allow the transfer of any unused estate tax exemption from the deceased spouse to the surviving spouse. Filing must be done within the IRS’s allowed timeframe, and late elections may require special relief.

Update titles, trusts, and beneficiary designations

Property and accounts titled jointly or in the name of a trust will often need to be retitled to reflect the surviving owner. This may include updating payable-on-death (POD) and transfer-on-death (TOD) accounts, re-registering investment or bank accounts, and funding trusts as directed in the estate plan. Reviewing life insurance and retirement account beneficiaries ensures that future transfers align with your wishes.

How a financial advisor can help
An estate planning advisor at EP Wealth can collaborate with your estate attorney and tax professional to:

• Identify assets eligible for a step-up in basis and coordinate valuation records
• Review whether filing Form 706 for portability is appropriate and time-sensitive
• Prioritize retitling and beneficiary updates in coordination with your estate plan
• Confirm that changes in ownership and documentation are reflected across your broader financial strategy

The 6–12 Month Strategic Checklist

After the immediate tasks are handled, the months that follow often provide an opportunity to make decisions that can shape your long-term financial picture. These steps can help you align income, investments, and your estate plan with your new circumstances:

1. Review cash flow and adjust portfolio withdrawals
   Assess ongoing income and expenses, and structure withdrawals in a way that accounts for your updated tax bracket and potential Medicare premium thresholds.
2. Evaluate partial Roth conversions in lower-income years
   Years with temporarily reduced taxable income can present opportunities to convert part of a traditional IRA to a Roth IRA at a potentially lower tax rate. There may also be an opportunity to convert in the year you are eligible for married filing jointly or qualifying surviving spouse status, as you are subject to joint filer tax brackets and higher standard deductions.
3. Consider qualified charitable distributions (QCDs) if age 70½ or older
   Directing IRA withdrawals to qualified charities can fulfill required minimum distributions without increasing adjusted gross income, which may also help with Medicare and tax thresholds.
4. Obtain appraisals for real estate and business interests
   Updated valuations can document basis adjustments, which may reduce future capital gains when these assets are sold.
5. Refresh estate documents
   Review and update wills, powers of attorney, and healthcare directives to reflect your current wishes and any changes in executors, trustees, or agents. Your attorney will also help with reviewing the titling of your personal assets and assist you with making any updates as needed.

How a financial advisor can help
A financial advisor can coordinate with your CPA and estate attorney to:

• Model cash flow needs alongside portfolio withdrawal strategies
• Identify years that may be advantageous for Roth conversions or QCDs
• Track and document asset valuations for tax purposes
• Incorporate updated estate documents into your broader financial plan

Special Considerations for High-Net-Worth Families

For families with significant assets, certain estate, tax, and retirement account decisions can have an even greater long-term impact. The years immediately following the loss of a spouse may present options—or deadlines—that are worth reviewing closely:

• Coordinate portability with lifetime gifting
  If the federal estate tax exemption is at a higher level, filing for portability of a deceased spouse’s unused exemption and making strategic lifetime gifts while the higher amount applies may help preserve more of your combined exemption. Even if current exemption levels change in the future, taking advantage of available limits now could potentially provide long-term estate planning benefits.
• Reassess advanced trust structures
  Trusts such as QTIP (Qualified Terminable Interest Property), SLATs (Spousal Lifetime Access Trusts), and ILITs (Irrevocable Life Insurance Trusts) may need to be updated to reflect the survivor’s current liquidity, income needs, and estate goals.
• Review inherited workplace retirement plans
  Employer plans can impose stricter payout rules than IRAs, potentially forcing faster distributions and higher taxable income. When plan rules allow, rolling inherited workplace retirement accounts to an IRA may provide greater flexibility in managing withdrawals.

How a financial advisor can help
A financial advisor can work with your estate attorney and tax professional to:

• Determine whether to combine portability elections with lifetime gifting before exemption amounts change
• Review trust provisions in the context of the survivor’s financial needs and goals
• Evaluate rollover options for inherited workplace retirement accounts to maintain withdrawal flexibility

Coordinating Your Financial Life After Losing a Spouse

The months and years after losing a spouse can bring significant changes to your financial picture, many of which unfold gradually. While this guide covers common steps and considerations, applying them to your unique situation often requires coordinated planning across taxes, investments, and your estate plan.

EP Wealth retirement planning advisors collaborate with your CPA, estate attorney, and other professionals to bring these moving parts together in one clear plan. We help you stay on track, revisit earlier decisions as circumstances evolve, and identify opportunities or risks that might not be obvious in the moment. Our role is to be a steady resource, providing guidance that reflects your goals and works in step with the rest of your advisory team.

Contact an advisor today to learn more about how we can assist you.

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